Prep schools closing - worried my kids school may close with little notice

[ABetaDad]

I am starting this thread because I know a lot of parents on here have kids in private Pre-prep and Prep on here and I wanted to get a sense of just how bad things are financially in the Prep school sector and give you a heads up on what is happening to my kids school just in case it happens to yours.

My DS1 and DS2 go to a nice small prep school and we are very happy with it. I have been talking to other parents and am shocked to hear that so many of them are planning to take their kids out by September. I am not sure the school knows this yet but I estimate that next year they wil only have 2 kids remaining out of the current Year 1, they will only have 5 out of current Year 2. I expect very few to join as my DS1 was showing parents round at the recent open day and there was only 1 child visiting who was eligible for Year 1 or Year 2.

The nursery and Reception years will be fairly full as will Years 4, 5, 6 although a few are planning to withdraw on those years as well. However, I know that Year 7 in the senior school had a big drop off in numbers last year. It seems that at the key transition stages parents have already been deciding to take their kids out or not put them in. With the credit crunch now affecting jobs much more severely I can only see this getting much worse.

There was a very interesting article in the Financial Times Yesterday about a Prep school that had been forced to close in Sevenoaks. Read the article here:

www.ft.com/cms/s/0/3f4e835c-fc93-11dd-aed8-000077b07658.html

A key sentence in the article is this:

"I think we are only at the tip of the iceberg," said Sue Fieldman, an editor at the Good Schools Guide. "There's much more coming in the next six months . . . a huge number of private school parents are in financial services and banking."

All prep and senior private schools will know for sure by the end of March what their numbers are going to be next year and I know that many schools have closed in the last year and only given 1 term notice to parents.

There is possibility my kids school might merge with another local Prep and sell off one of the sites but that is not certain to happen and parents have certainly not been given any information.

I am trying to put together a plan just in case it happens.

Is anyone as worried as me? Do any of you have the experience of it happening? What are your plans if it happens to you?

I know a lot of people on here disagree with private schooling but I would like to try and keep this thread away from 'private v state' arguements. Having a school close and then being forced to move kids at short notice is very disruptive and stressful for everyone so I hope we can swap info on here as I am sure schools wil delay telling parents as long as possible.

Warning: Please please do not name schools directly or say where they are as we do not want to start unfounded rumours.

Our DCs are in a smallish independent school. While I feel reasonably confident that it will be OK, we have thought about contingencies.

In Oct last year (when all the financial crisis was at it's height) we put in an application for DS2 for a Year 3 place this Sept. Although we are unlikely now to take it up, it seemed like a sensible ides at the time.

I suspect a lot of parents will have done the same, thinking "we'll review how everything is by February".

Yes I expect there are lot of people who are keeping state and private options open for reception too.

Thanks all for your very interesting answers.

Just summarising what you all said, I conclude I would say a Prep school with say 3 classes per year should be able to cut back to 2 and survive without too many problems. Indeed, I know one very popular Prep that did just that last year.

It seems to be the small Preps with just one class per year that are struggling and more especially those in the South East that are most dependent on financial services driven parents.

That said, it is clear that a lot of parents are thinking they might delay entry into Prep and senior school and are spreading their options with multiple entries to private and state schools and leaving the real decisions until the last minute in about 4 week time which is when most final admission deadlines are for September.

I will resurrect the thread in April and let you all know how it has gone as we should know by then what the future of the school is and what we decided to do if it closes.

Not just financial services, telecoms and IT are being hit bad in the Thames Valley (aka Silicon Valley) so we are seeing changes as a result of that.

A well known very expensive (one of the most expensive in the south) prep was in our local paper saying that numbers are down, it is an old fashioned prep of long standing good name - my DH went their 40 yrs ago!

My DD's pre/prep which is huge has just finished a capital expendidture project that cost over 5million, they are so huge with such long waiting lists I cannot see they will become unviable.

My DS' pre/prep is far more niche and much smaller (16 per year) and I am concerned for their future.

MarmadukeScarlet - I to know of one boys Prep near me exactly like the one you describe. Very old and highly respected and highly rated. Gets many of its pupils to the very top boarding schools and often with top scholarships.

Despite all that (and I happen to have intimate knowledge of its numbers) I can assure you it is on the very edge financially and think it will be forced to merge with a larger one nearby. Again it is a relatively small Prep school.

Unless something catastrophic happens to their finances (redundancy with no back-up savings), most parents will struggle through until the end of the particular stage of their dc's education is over. There will be one or two pupils extracted mid-point where parents have lost their jobs of course but surely not loads.

It's the entry points where numbers will take the biggest hit of all - i.e. 4+, 7+ 11+ in September. Parents who've lined up pre-prep school places but are allocated a decent state primary and are feeling a bit of pressure from the recession are going to go state in their droves imho, whereas just a year ago they'd have gone private.

The full effect of this financial crisis is going to take a while to feed through to pupil numbers beyond entry point years imgo.

Litchick and Lady Muck,

which world are you living in...?

Is it La la land...?

Litchick said:

"I don't know one person who has been made redundant or who is making alternative arrangements.
It seems to me that the people suffering from the credit crunch are shop workers and agency workers of the min wage. Plus ca change."

Lady Muck said:

"I'm afraid that I still don't quite buy the whole "bonuses funding school fees" line. I think that that is just a media stereotype. Half of ds1's class have parents in finance and no-one has been particularly hit yet - some are even doing particularly well due to promotions. It is redundancies and not bonuses which will force people to change schools."

I don't work in Finance or the City though have friends who do and have been laid off...and in my sector, an IT company there have been lay offs, and the bonuses this year are pitiful unlike previous years and yes they are used to fund school fees though luckily I have savings and could still manage to pay fees from a decent base salary - but I only have one DC ...

Of course it's having an effect everywhere not just incomes, but on savings, on pensions, on share portfolios....and general feelings about job insecurity.

Also while you may be better off paying less interest on your mortgage ...but don't forget the negative impact of the recession on house valuations...that's why most folk are using the savings on mortgage interest to pay down their loans more quickly.

Ido nnot believe thereis any need forpanic.Numbers alwyas go up and down.What parents say now is different to what they actually do oncetheystart looking into alternative schools.

I'd be seriously worried if the numberson rollhas beenin decline in a big way 3 yearsormore in a row, across a rangeof age groups.Justone year group does not reflect overall trends.
Perception depends on the political viewpoint of the newspaper you are reading.

My ds1 and ds2 are at a small-ish prep school and I've not yet heard of anyone leaving. I've heard of a couple of the dads in the financial sector being made redundant, but that hasn't affected things - on the grapevine I've heard they got a decent payoff (we're talking a couple of years money) and I also know some of the parents have school fee insurance.

I also know at least two children in ds2's year whose fees are paid entirely by retired grandparents.You can't possibly predict the impact unless you know individual financial circumstances.

At the moment there is still a long waiting list for reception places. That tends to firm up around Easter after all the state school places have been allocated - but I would still be very surprised if numbers dropped significantly this year.

Not La La Land, Amber, though people are so rich here sometimes it does feel that way.
All I can say is that DH and all his mates work in the City and none have been laid off. Ditto all the parents at my DCs school - we all ask each other with unholy paranoia - but thus far everything seems to be fine.
As for a bonus...well they may go down a bit but that still le4aves you earning far more than most folk can ever dream and if you've been on 500k+ for the last five years you will have enough stashed to tide you over.
What I do see all around me are low paid workers taking the hit.
Woolies closed leaving over twenty part time workers jobless, a local car factory laid off all its agency min wage workers. I've had a lot of leaflets put through my door offering ironing/gardening etc because these workers are feeling the pinch. I'm sure this is true of every town in the country.
I really don't think the rich are or will suffer that much, it's those that cam least afford it in the first place.
As I said, plus ca change.

Fingers crossed they all go under and some equality begins in our education system!

Oh that's a really considerate post bamboo, so you'd love it if thousands of children who are happy at their schools were uprooted and had to move from their friends to another school would you? Would you like that to happen to your dc's? I suspect not.

An interesting place to look, if the school is a charity, is the Charities Commission website.

I had a look at my school there, and it looks like they have a very healthy current account balance. This means that even if income goes down, the show can go on.

I work in a very small school, and I can see plenty of opportunity for tightening our belts. We run some very small classes, and also have some teachers retiring this year, or otherwise moving on. There is scope for cutting back for a couple of years.

Good point scienceteacher, although our school isn't but is attached to a senior school so I'd hope we'd be okay.

Bamboo, typical posting from you. Can't understand why you are quite so bitter. If we all decamped to state school your dcs would have to endure even bigger class sizes!

Scienceteacher, I could see our school maybe cutting back on some of the bells and whistles stuff if they had to. New swimming pools and theatres can wait. I'd much rather they did that than put fees up.

We don't have a pool or a theatre, and consequently no mortgages to service

I've heard murmurs of boys in DS1's year going on to other schools, but his school is very good, at least 1000 years old, and, anyway, is a cathedral choir school - I can't see it going under.

I'd assume newer schools, or those that aren't charities, are more likely to shut down ...

Amber2 - in my "world" redundancies are the same as layoffs, so I totally agree that if someone is laid-off then they will have to look at how they pay their fees, and whether they can continue to do so.

Most of the parents that I know working in finance in the city have still had some level of bonus, and in fact still have a job. That is not the same as saying everyone has, but I do think that the media gives a rather distorted view as to what is happening. I know that many other sectors have cut back on bonuses, but I also think that in general bonuses in those sectors are not such a significant part of the salary package (eg dh's bonus is over half of his total package so if this were cut then it would equate to a 60 or 70% paycut in remuneration).

In terms of the impact on mortgage interest rates versus loss of capital gain, again I can only look at people I know. Most of them are in the house in which they want to bring up their children so are happy to sit out 10 years or so.

Are people concerned about job security - yes. Is this translating to them making short term decisions about their children's education - no.

My world may not be the same as yours, but I am sceptical of some of the media coverage. I have been approached by journalists who want to write the "how are private school parents surviving in this climate" story. For many of them, there really isn't a story, or if there is, it isn't an interesting one (eg cutting back pansion contribs for a year or two, using an ISA or two). Journalists love the "80 parents have had to pull their children out of private school" type story. Though typically they have to translate it into percentages or some other statistic as people would then just work out that over the entire county that isn't a huge number.

Most parents who have opted for private education have done so for either the long haul or for very specific reasons, and they will not want to sacrifice their goal for what could be a short-term hit (to them). Even for those who are less convinced about private education, there is the issue of timing - simlar to the housing market say. In the same way that now isn't a good time to downsize your house, neither is it a good time to downsize your education unless you are at a natural entry/leaving point.

Great post, Lady Muck.

As for the mortgage thing - our mortgage interest has gone down by about £300 a month.

In our school, our Y7 numbers for September are about the same as our current Y7, and we always pick up a few between state school allocations and September.

I agree with Lady Muck
We have enough savings to cover the DCs whole school lives and we don't know anyone who has been made redundant or laid off.My childrens school remain over subscribed with DDs pre-prep still turning many girls away

The current credit crunch is hideous for those affected and has implications for everyone.
But saying that you are currently unaffected does not mean that you do not feel enormously for those who are. Nor does it mean you are living in cloud cuckoo land.

I think the change is more likely to come at secondary level in areas where there is a good state alternative, such as grammar schools.

Like Litchick, I've had loads of leaflets through my door recently offering ironing, gardening, handyman services, cleaning, patio/drive cleaning. (Still nothing from plumbers, electricians or window cleaners though!)

The thing that annoys me most amount bonuses is that when I worked for a bank it was called profit-sharing. No profit, no profit-share. I guess bonuses are individual performance related so not reliant on the company as a whole; no team spirit required?

I heard that the numbers sitting locally for independent schools was up on last year (11+). Interestingly the council said that their numbers are up too.

So either there was a birth boom 11 years ago or more parents are hedging their bets.

Sue, recently they've been a combination fo the two - but RBS has just declared that there will be no Profit Share scheme, neither this year nor in future years and next to no individual performance related bonuses(other than those who had it written into contracts) payable in stages over the next 3 years , assuming things turn around . Lloyds/HBOS are expected to follow suit. As to savings well, many of us will have accrued share holdings form past schemes which are currently worth diddly squat. There sure isn't much team spirit at the moment !